Lessons Overlearned

Affordable health care is important, but right now making a living is more urgent.

Presidents tend to overcompensate for the errors of their predecessors in the same party and in so doing, sow seeds of their own mistakes. Bill Clinton wanted above all to avoid Jimmy Carter's fate -- losing re-election because the economy was heading south on Election Day. So Clinton made a deal with Alan Greenspan to slash the budget deficit and thereby jettison much of his ambitious campaign agenda -- Greenspan's precondition for lowering interest rates and causing an economic boom in time for the re-election -- and then took direction from Dick Morris, who told Clinton to move to the right. The result: Clinton avoided Carter's failure and won re-election handily. But the Clinton years produced few if any major social reforms. Clinton spent so much of his initial political capital, as well as his time and energy, on deficit reduction that he didn't have enough left to enact health care in 1994.

Barack Obama came to the White House intent on not repeating Clinton's failure to enact universal health care. Did he overlearn the Clinton lesson? Obama seems to have made all the right moves to enact something he can credibly label health-care reform: Rather than spend his political capital elsewhere, he reserved most of it for the health-care fight.

This may turn out to be a mistake comparable to Clinton's overemphasis on deficit reduction. Obama's focus on health care when the economy is still so fragile and unemployment moving toward double digits could make it appear that the administration has its priorities confused. While affordable health care is important to Americans, making a living is more immediately urgent. Yet the administration's efforts to date on this more basic concern have been neither particularly visible nor coherent. It's hard for most people to understand that unemployment would be worse were it not for the stimulus package; the much-flaunted new "green jobs" have not appeared yet, nor are they likely to for years. The White House has had equal difficulty explaining to Main Street why it would be far worse off today had Wall Street's biggest banks not been bailed out. Almost nothing has trickled down. Small businesses still can't get loans.

While health reform, if done right, can help American families stay afloat in the economy, most Americans will not see any appreciable decline in the cost of health insurance nor clear improvement in the efficiency or quality of the health care they receive, and those who will benefit from the bill won't see it for several years. That's partly a result of Obama's sharpest break from Clinton -- whose ambitious plan drew immediate fire from Big Pharma, the American Medical Association, and health insurers: The Obama White House bought off the medical-industrial complex by promising it fatter profits, bolstered by tens of millions of new paying customers.

That and other deals cut with industry -- including promises to Big Pharma that Medicare wouldn't use its bargaining clout to reduce drug prices, to the AMA that doctors wouldn't have to face larger cuts in Medicare reimbursement rates, and to private insurers that the White House wouldn't fight hard for a public insurance option -- will make the resulting reforms far more costly. These extra costs will be borne by those Americans who will be required to buy insurance but won't qualify for federal assistance, along with Medicare beneficiaries who will be paying more and receiving less. These people may not know they're indirectly paying the costs of buying off these industries, but they'll know they're getting shafted (Republicans will be sure to make them aware, even though the GOP has a much longer record of shafting the middle class for the benefit of big business).

It's possible that Obama can pivot off a health-care victory and launch some new initiatives that palpably and quickly spur job growth. The worry is that there aren't any -- at least none that can work fast enough to reverse the tide of unemployment before the midterm elections. Fiddles such as a new jobs tax credit can help, but they won't make much of a dent. Even with a larger stimulus, a jobs recovery would still be far off. The tangible benefits of health-care reform are likely to be so elusive in the meantime that the public may become easy prey for demagogues on the right who blame Democrats for the insecurities that bedevil the nation next November.

If Obama and the Democrats lose Congress in the midterm elections, which is not a small possibility, it will be because the president learned only the most superficial lesson of the Clinton years. Health-care reform is critically important. But when one out of six Americans is unemployed or underemployed, getting the nation back to work is more so.

About the Author

Robert B. Reich, a co-founder of The American Prospect, is a Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. His website can be found here and his blog can be found here.